Professional Documents
Culture Documents
Financial Success
A College Education
is a Smart Investment
Source: Undergraduate Students and Credit Cards in 2004, Nellie Mae, May 2005
It’s Hard to Get Out From Under
Credit Card Scenario #1 Credit Card Scenario #2
• You charge $2,500 • You charge $2,500
• You pay $50 per month • You pay $100 per month
• Yearly interest rate is • Yearly interest rate is
19.9% 19.9%
• How long will it take to pay • How long will it take to pay
the balance? the balance?
9 years 1 month 2 years 9 months
Six Steps For a
Smart Start After College
1. Establish Financial Goals and a Plan for Getting
There
2. Separate Needs from Wants
3. Create a Monthly Spending Plan
4. Start Saving and Bank Wisely
5. Stay on Top of Your Student Loan Obligations
6. Use Credit Wisely
1. Establish Financial Goals
• Short Term • Long Term
– Buy a car – Buy a home
– Buy new furniture – Start a business
– Be debt free – Start a family
– Vacations – College tuition for children
– Pay off student loans
– Retirement
2. Separate Needs from Wants
• Needs are fixed expenses, such as rent or
mortgage, utilities, food, clothing, transportation,
taxes, health care, childcare and repairs.
• Wants are variable expenses: entertainment,
cable, internet service, magazines, eating out,
hobbies and cell phones.
Needs vs. Wants
Item Need Want
Based on 6% interest.
Choose the Right Bank
• When choosing a bank seek …
– Convenient Location and Hours
– Needed Types of Accounts
– Competitive Interest Rates
– Low Service Charges
– Available ATMs
– Secure Online Services
Use Banking Services Wisely
• Shop around for banks that offer incentives
• Avoid overdraft fees
• Record all purchases
• Balance your account monthly
• Take advantage of online banking
• Debit cards are not credit cards
5. Stay on Top of
Student Loan Obligations
• Subsidized Loans
– Federal government pays the interest until the student
enters repayment.
– When the borrower has been granted a deferment, the
government pays the interest during the deferment
period.
• Unsubsidized loans
– Student is responsible for paying the interest that
accrues on the loan from the date of disbursement until
the loan is paid in full, regardless of enrollment status.
Pay Down Student Loans
Pay Extra and Save
Student Loan • An extra $50 a month
$15,000 borrowed
10 year term – Pay off loan 3 years faster
8.25% interest rate – Save $2,231 in interest
• An extra $250 a month
– Pay off loan 6 years faster
– Save $4,892 in interest
Monthly payment: $184
Total interest paid: $7,077 • An extra $500 a month
– Pay off loan 8 years faster
– Save $5,762 in interest
6. Use Credit Wisely
• Advantages • Disadvantages
– Build credit – Negatively affect credit
– Rent a car – Debt accumulation
– Available for emergencies – Years to repay debt
– Frequent flyer miles – High interest rates
– Online purchases – Repayment could be 3 to
– Immediate cash 5 times the original
availability purchase price
– Immediate cash
availability
Choose the Right Credit Card
• Interest Rate
• Adjustable Rate Credit Cards
• Fixed Rate Credit Cards
• Fees: late fees, over the limit fees, annual fees,
and balance transfer fees
• Reward Programs
• Introductory Rates
Manage Your Credit Cards
• Choose a credit card with no annual fee
• Use credit cards conservatively
• Charge only what you can pay off at the end of
the month
• Make monthly payments on time
• Always pay more than the minimum requested
• Be wary of credit cards that offer free
merchandise
Manage Your Credit Cards
• Do not purchase on impulse
• Do not charge more than you can afford
• Know when your credit card payment is due
• Do not live a lifestyle you cannot afford
• Do not use credit cards for cash advances, unless
it is an emergency
Protect Your Credit
• Reduce access to your personal data
• Always take credit card receipts with you
• Never permit your credit card number to be
written onto your checks
• Order your free credit report once a year
• Remove your name from the marketing lists of the
three credit reporting bureaus
• Never allow anyone to use your credit card
Protect Your Credit
• The three national credit bureaus are:
– Equifax
www.equifax.com
(800) 997-2493
– Trans Union
www.transunion.com
(800) 888-4213
– Experian
www.experian.com
(888) 397-3742
Protect Your Credit
• www.annualcreditreport.com
(877) 322-8228
• www.optoutprescreen.com
(888) 5OPTOUT
Feeling Overwhelmed?
• Ask for help
• Call at the first sign of trouble
– Denial of credit
– Credit cards that are maxed out
– Borrowing money to pay bills
– Paying only the minimum
• Contact your student loan provider
• Contact a Consumer Credit Counselor
• Work out a plan to repay
Follow these guidelines and you will
have a successful future! You will
be able to take that vacation, pay off
bills, and buy your new car or home!
QUESTIONS
THANK YOU!